Japanese bank finances US hydrogen fuel network

Japanese bank MUFG Bank is providing financing for the expansion of a US-based hydrogen fuel station network under its sustainability management strategy to address climate change.

MUFG Bank has signed a $50mn loan agreement with FirstElement Fuel, a Californian developer of hydrogen fuel stations, to finance expansion of its network. FirstElement operates more than half of California's hydrogen stations and has 57 more under various phases of development in the state.

This is MUFG's first hydrogen-linked loan agreement. The bank is aiming to gain knowledge of California's hydrogen business by supporting FirstElement's hydrogen distribution network expansion. California is the world's largest market for hydrogen fuel cell electric vehicles (FCEVs). The state's Low Carbon Fuel Standard programme targets a 20pc reduction in transportation carbon intensity by 2030.

Japanese auto producers Toyota and Honda have been supporting FirstElement over the past several years in developing hydrogen fuel stations in California. Japanese trading house Mitsui last year invested $25mn in FirstElement, targeting to work together on hydrogen- and FCEV-related businesses.

Japan's state-owned bank JBIC has also made $23mn investment in FirstElement to finance its hydrogen fuel network expansion, which is expected to help increase sales of Toyota and Honda's FCEVs in California. JBIC last month agreed with the California state government to enhance collaboration for promoting the business of Japanese companies in various areas including clean mobility and clean energy such as hydrogen and renewables.

Mitsubishi UFJ Financial Group, MUFG Bank's parent company, this month unveiled a plan to enhance sustainability management, revising up a cumulative target for sustainable finance to ¥35bn ($320mn) by the April 2030-March 2031 fiscal year from ¥20bn previously. It plans to focus its support on renewable energy, hydrogen and next-generation energy and carbon recycling in efforts to address climate change and environmental protection.

MUFG Bank last month also joined the Poseidon Principles, a global bank initiative to reduce greenhouse gas emissions from shipping.